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Archive for the ‘Coffee Can Investing’ Category

MOMO Inc. (MOMO) – A Growth Stock That Offers Value

Monday, December 2nd, 2019

Momo Inc. has been getting positive media coverage as of late, check out what these two analysts had to say about the stock – 3 Undervalued Mid-Cap Stocks That Score a “Perfect 10” and Better Buy: Momo vs. Huya.

Technicals

The technicals sure look good for MOMO as the stock is seen breaking out of a consolidation pattern that had contained price action since around April. The stock broke upward from the triangle pattern in early November and showed strong buying on a dip to retest the pattern in the past week.Further, the stock trades comfortably above the 50, 100, and 200-day moving averages which have all converged between $34-$35.

MOMO Chart December 2019 options spread

MOMO Chart December 2019

If you agree there’s further upside ahead for MOMO, consider this trade which is a bet that the stock will continue to advance over the next five weeks, at least a little bit.

Buy To Open MOMO 03JAN20 35 Puts (MOMO200103P35)
Sell To Open MOMO 03JAN20 37.5 Puts (MOMO200103P37.5) for a credit of $0.93 (selling a vertical)

This price was $0.02 less than the mid-point of the option spread when MOMO was trading near $37.5.  Unless the stock rallies quickly from here, you should be able to get close to this amount.

Your commission on this trade will only be $1.30 per spread.  Each contract would then yield $91.70 and your broker would charge a $250 maintenance fee, making your investment $158.30 ($250 – $91.70).  If MOMO closes at any price above $37.5 on January 03, both options would expire worthless, and your return on the spread would be 58% (662% annualized).

Changes to Investor’s Business Daily (IBD) Top 50 This Week:

IBD Underlying Updates November 30, 2019

IBD Underlying Updates November 30, 2019

We have found that the Investor’s Business Daily Top 50 List has been a reliable source of stocks that are likely to move higher in the short run.  Recent additions to the list might be particularly good choices for this strategy, and deletions might be good indicators for exiting a position that you might already have on that stock.

As with all investments, you should only make option trades with money that you can truly afford to lose.

Happy trading,

Terry

J2 Global (JCOM) – A Little-Known Stock Showing a lot of Strength

Monday, November 25th, 2019

There was an article published about J2 Global on SeekingAlpha in July that was titled “J2 Global is a Sleeper”. There’s a lot of truth to this, this stock is not very well known or covered in media but from the articles that are written about the company, quite a few of them have good things to say about it. Here are two of them – J2 Global’s Charts Send Bullish Signals and J2 Global (JCOM) Stock Analysis offering an attractive story

Technicals

JCOM has broken higher from a major technical pattern. The weekly chart below shows that the roughly $91 price point offered a major hurdle since the stock price first approached it in early 2017. After consolidating in a range below the level for more than two years, it finally broke higher last month. In the past week, there has been a pullback, offering an attractive entry with major support from the breakout point nearby. Breakouts like this tend to signal a significant upside considering it is on a weekly chart. The technical break should create demand among technical traders and keep the stock price bid, likely even ahead of the $91 breakout point.

JCOM Chart November 2019 vertical options spread

JCOM Chart November 2019

If you agree there’s further upside ahead for JCOM, consider this trade which is a bet that the stock will continue to advance over the next four weeks, or at least not decline very much.

Buy To Open JCOM 20DEC19 90 Puts (JCOM191220P90)
Sell To Open JCOM 20DEC19 95 Puts (JCOM191220P95) for a credit of $1.48 (selling a vertical)

This price was $0.02 less than the mid-point of the option spread when JCOM was trading near $95.  Unless the stock rallies quickly from here, you should be able to get close to this amount.

Your commission on this trade will only be $1.30 per spread.  Each contract would then yield $146.70 and your broker would charge a $500 maintenance fee, making your investment $353.30 ($500 – $146.70).  If JCOM closes at any price above $95 on December 20, both options would expire worthless, and your return on the spread would be 42% (613% annualized).

Changes to Investor’s Business Daily (IBD) Top 50 This Week:

IBD Underlying Updates November 23, 2019

IBD Underlying Updates November 23, 2019

We have found that the Investor’s Business Daily Top 50 List has been a reliable source of stocks that are likely to move higher in the short run.  Recent additions to the list might be particularly good choices for this strategy, and deletions might be good indicators for exiting a position that you might already have on that stock.

As with all investments, you should only make option trades with money that you can truly afford to lose.

Happy trading,

Terry

Consider Alibaba (BABA) Following the Technical Break

Monday, November 18th, 2019

Consider Alibaba (BABA) Following the Technical Break

With the stock markets gaining upward momentum Alibaba is gaining attention. The following two analysts have included the stock in their top picks of stocks to own – These 3 ‘Strong Buy’ Giants Still Have Room for Growth, Say Analysts and 5 Mega Cap Stocks Hedge Funds Are Crazy About.

From a technical standpoint, BABA has scaled above a fairly important resistance level at $181. This is a level that held the stock lower since July and the upward break suggests the stock has resumed within its uptrend. Further, the stock has also regained its 20-day moving average and has been trading in a bullish trendline channel which originates from a low printed in early October. There has been a strong show of buying on a retest of the horizontal level in the past week which is also a bullish sign.

BABA Chart November 2019 vertical options spread

BABA Chart November 2019

If you agree there’s further upside ahead for BABA, consider this trade which is a bet that the stock will continue to advance over the next five weeks, or at least not decline very much.

Buy To Open BABA 20DEC19 180 Puts (BABA191220P180)
Sell To Open BABA 20DEC19 185 Puts (BABA191220P185) for a credit of $2 (selling a vertical)

This price was $0.02 less than the mid-point of the option spread when BABA was trading near $185.  Unless the stock rallies quickly from here, you should be able to get close to this amount.

Your commission on this trade will only be $1.30 per spread.  Each contract would then yield $198.70 and your broker would charge a $500 maintenance fee, making your investment $301.30 ($500 – $198.70).  If BABA closes at any price above $185 on December 20, both options would expire worthless, and your return on the spread would be 66% (753% annualized).

Changes to Investor’s Business Daily (IBD) Top 50 This Week:

IBD Underlying Updates November 16, 2019 via Terry's Tips

IBD Underlying Updates November 16, 2019

We have found that the Investor’s Business Daily Top 50 List has been a reliable source of stocks that are likely to move higher in the short run.  Recent additions to the list might be particularly good choices for this strategy, and deletions might be good indicators for exiting a position that you might already have on that stock.

As with all investments, you should only make option trades with money that you can truly afford to lose.

Happy trading,

Terry

Is CBRE Group (CBRE) on the Verge of a Breakout?

Monday, November 11th, 2019

According to the following article, CBRE is one of the two most actively traded stocks in the Property Management industry. Further, out of the two, they believe it offers better value – CBRE Group, Inc. (CBRE) and Fortive Corporation (FTV) Go Head-to-head. While CBRE’s stock price came under a bit of pressure following its latest earnings report, there were some positive takeaways from it. The main one being an upgrade in earnings per share estimates among analysts. Full details can be found here – CBRE Group, Inc. Third-Quarter Results Just Came Out: Here’s What Analysts Are Forecasting For Next Year

CBRE’s stock price is trading in an ascending triangle which is considered a continuation pattern. The price reaction from the company’s recent earnings report was not positive, however, the decline was brief and well supported by the 100-day moving average. More importantly, the stock has since recovered to nearly fully erase the loss which is a sign of strength. These things combined offer a bullish signal and if the stock breaks above triangle resistance around $56, it could enter into a technical breakout.

CBRE Chart November 2019 vertical options spread

CBRE Chart November 2019

If you agree there’s further upside ahead for CBRE, consider this trade which is a bet that the stock will continue to advance over the next six weeks, or at least not decline very much.

Buy To Open CBRE 20DEC19 50 Puts (CBRE191220P50)
Sell To Open CBRE 20DEC19 55 Puts (CBRE191220P55) for a credit of $1.18 (selling a vertical)

This price was $0.02 less than the mid-point of the option spread when CBRE was trading near $55.  Unless the stock rallies quickly from here, you should be able to get close to this amount.

Your commission on this trade will only be $1.30 per spread.  Each contract would then yield $116.70 and your broker would charge a $500 maintenance fee, making your investment $383.30 ($500 – $116.70).  If CBRE closes at any price above $55 on December 20, both options would expire worthless, and your return on the spread would be 30% (262% annualized).

Changes to Investor’s Business Daily (IBD) Top 50 This Week:

IBD Underlying Updates November 9, 2019

IBD Underlying Updates November 9, 2019

We have found that the Investor’s Business Daily Top 50 List has been a reliable source of stocks that are likely to move higher in the short run.  Recent additions to the list might be particularly good choices for this strategy, and deletions might be good indicators for exiting a position that you might already have on that stock.

As with all investments, you should only make option trades with money that you can truly afford to lose.

Happy trading,

Terry

PayPal (PYPL) Is Set To Resume Its Bullish Trend

Monday, November 4th, 2019

Recent headlines are suggesting that now might be a good time to get into PYPL, take a look at what these two analysts are saying about the stock – Why I Just Bought PayPal Stock and PayPal’s Momentum Is Spreading Across the World.

Technicals

There are several recent developments that signal PayPal’s stock may have resumed within its broader bullish trend. For starters, the stock has regained its 50-day moving average. This is an indicator that PYPL traded below for much of the correction that started in July. There is a horizontal level near the moving average that is currently creating a nice support confluence. This level falls near $104 and originates from a low posted in late May. Perhaps the strongest signal is that the stock is bouncing from the 50-week moving average, this is an indicator the stock has not traded below on a sustained basis for at least 5 years. Further, a bullish reversal candlestick has printed on both a weekly and monthly chart.

PYPL Chart November 2019 vertical options spread

PYPL Chart November 2019

If you agree there’s further upside ahead for PYPL, consider this trade which is a bet that the stock will continue to advance over the next five weeks, at least a little bit.

Buy To Open PYPL 06DEC19 102 Puts (PYPL191206P102)
Sell To Open PYPL 06DEC19 105 Puts (PYPL191206P105) for a credit of $1.13 (selling a vertical)

This price was $0.02 less than the mid-point of the option spread when PYPL was trading near $105.  Unless the stock rallies quickly from here, you should be able to get close to this amount.

Your commission on this trade will only be $1.30 per spread.  Each contract would then yield $111.70 and your broker would charge a $300 maintenance fee, making your investment $188.30 ($300 – $111.70).  If PYPL closes at any price above $105 on December 06, both options would expire worthless, and your return on the spread would be 59% (673% annualized).

Changes to Investor’s Business Daily (IBD) Top 50 This Week:

IBD Underlying Updates November 2, 2019 options strategy

IBD Underlying Updates November 2, 2019

We have found that the Investor’s Business Daily Top 50 List has been a reliable source of stocks that are likely to move higher in the short run.  Recent additions to the list might be particularly good choices for this strategy, and deletions might be good indicators for exiting a position that you might already have on that stock.

As with all investments, you should only make option trades with money that you can truly afford to lose.

Happy trading,

Terry

Five Below (Five) Recovers in August and Offers a Buy Signal

Monday, September 2nd, 2019

This week we are looking at another of the Investor’s Business Daily (IBD) Top 50 List companies.  We use this list in one of our options portfolios to spot outperforming stocks and place option spreads that take advantage of the momentum.

Five Below (Five) Recovers in August and Offers a Buy Signal

Five Below reported earnings in the past week which led to an upside break. Take a look at the following article for more details – What Five Below Wants Investors to Know. Also check out this article which discusses a recent price target upgrade from the Royal Bank of Canada – Five Below (NASDAQ:FIVE) Shares Gap Up Following Analyst Upgrade.

There have been quite a few technical developments in FIVE over the last few weeks. To start, the stock was correcting lower from a high in late April and this decline was contained within a descending trend channel. There was an upside break of this channel after the earnings report in the past week which offers a bullish signal. The stock has regained its 50 and 200-day moving averages which is also very positive. On a monthly chart, FIVE has posted a reversal candlestick pattern as it closed in the green in August to snap a prior three consecutive month decline.

FIVE Chart September 2019

FIVE Chart September 2019

If you agree there’s further upside ahead for FIVE, consider this trade which is a bet that the stock will continue to advance over the next five weeks, or at least not decline very much.

Buy To Open FIVE 04OCT19 117 Puts (FIVE191004P117)
Sell To Open FIVE 04OCT19 122 Puts (FIVE191004P122) for a credit of $1.85 (selling a vertical)

This price was $0.02 less than the mid-point of the option spread when FIVE was trading near $123.  Unless the stock rallies quickly from here, you should be able to get close to this amount.

Your commission on this trade will only be $2.50 per spread (the rate charged by thinkorswim for Terry’s Tips’ subscribers).  Each contract would then yield $182.50 and your broker would charge a $500 maintenance fee, making your investment $317.50 ($500 – $182.50).  If FIVE closes at any price above $122 on October 4, both options would expire worthless, and your return on the spread would be 57% (650% annualized).

Changes to Investor’s Business Daily (IBD) Top 50 This Week:

IBD Underlying Updates August 29, 2019

IBD Underlying Updates August 29, 2019

We have found that the Investor’s Business Daily Top 50 List has been a reliable source of stocks that are likely to move higher in the short run.  Recent additions to the list might be particularly good choices for this strategy, and deletions might be good indicators for exiting a position that you might already have on that stock.

As with all investments, you should only make option trades with money that you can truly afford to lose.

Happy trading,

Terry

Ulta Beauty (ULTA) Looks Poised to Break to Fresh Record Highs

Monday, August 12th, 2019

This week we are looking at another of the Investor’s Business Daily (IBD) Top 50 List companies.  We use this list in one of our options portfolios to spot outperforming stocks and place option spreads that take advantage of the momentum.

Terry

Ulta Beauty (ULTA) Looks Poised to Break to Fresh Record Highs

Several analysts are optimistic regarding Ulta Beauty’s stock price following their recent earnings surprise, here are two of them –  Why the Earnings Surprise Streak Could Continue for Ulta (ULTA) and How one retailer is beating the odds.

From a technical standpoint, ULTA has held above prior support near $330 and bounced higher. In the advance from the level, it has retaken both the 50 and 100-day moving averages. What’s most impressive about ULTA is the longer-run trend as the stock is up more than 40% YTD already. Considering the strong trend, and lack of bearish evidence, the path seems to be to the upside for ULTA with an aim of breaking to new record highs above $370.

ULTA Chart August 2019 Verticle Spread

ULTA Chart August 2019

If you agree there’s further upside ahead for ULTA, consider this trade which is a bet that the stock will continue to advance over the next five weeks, or at least not decline very much.

Buy To Open ULTA 13Sep19 342.5 Puts (ULTA190913P342.5)
Sell To Open ULTA 13Aug19 345 Puts (ULTA190913P345) for a credit of $1.13 (selling a vertical)

This price was $0.02 less than the mid-point of the option spread when ULTA was trading near $347.  Unless the stock rallies quickly from here, you should be able to get close to this amount.

Your commission on this trade will only be $2.50 per spread (the rate charged by thinkorswim for Terry’s Tips’ subscribers).  Each contract would then yield $110.50 and your broker would charge a $250 maintenance fee, making your investment $139.50 ($250 – $110.50).  If ULTA closes at any price above $345 on August 13, both options would expire worthless, and your return on the spread would be 79% (901% annualized).

Changes to Investor’s Business Daily (IBD) Top 50 This Week:

IBD Underlying Updates August 8, 2019 Trade Ideas

IBD Underlying Updates August 8, 2019

We have found that the Investor’s Business Daily Top 50 List has been a reliable source of stocks that are likely to move higher in the short run.  Recent additions to the list might be particularly good choices for this strategy, and deletions might be good indicators for exiting a position that you might already have on that stock.

As with all investments, you should only make option trades with money that you can truly afford to lose.

Happy trading,

Terry

Consider Essent Group (ESNT) Following Their Earnings Report

Monday, August 5th, 2019

This week we are looking at another of the Investor’s Business Daily (IBD) Top 50 List companies.  We use this list in one of our options portfolios to spot outperforming stocks and place option spreads that take advantage of the momentum.

Terry

Consider Essent Group (ESNT) Following Their Earnings Report

ESNT reported earnings in the past week and despite an early day dip, the stock managed to close higher on the day. The following article provides a view on why the stock could continue higher – 2 Stocks Poised to Thrive in Volatile Times: Essent Group Ltd., Cognex Corporation. Also take a look at this article which discusses the earnings report and the declaration of a new dividend – Essent Group Ltd. Reports Second Quarter 2019 Results & Declares Inaugural Dividend.

There are two significant things going for ESNT from a technical perspective. First, the stock dipped below major support at $45.38 on Friday but managed to close above it. This has resulted in a hammer candle which is a popular candlestick that signals the potential for a reversal. This pattern is not just seen on a daily chart, it is also present on a weekly chart and even on a 4-hour chart. The horizontal level is considered significant as it triggered a major turn last year and as it has acted as support in recent months. The fact that the candlestick pattern printed above such a significant level strengthens it. The other thing going for the stock is that it managed to close higher despite an overall heavy tone in the markets on Friday. This divergence is quite important as the markets look a bit heavy following the price action in the past week.

ESNT Chart August 2019 verticle options spread

ESNT Chart August 2019

If you agree there’s further upside ahead for ESNT, consider this trade which is a bet that the stock will continue to advance over the next seven weeks, or at least not decline very much.

Buy To Open ESNT 20SEP19 40 Puts (ESNT190920P40)
Sell To Open ESNT 20SEP19 45 Puts (ESNT190920P45) for a credit of $1.68 (selling a vertical)

This price was $0.02 less than the mid-point of the option spread when ESNT was trading near $46.  Unless the stock rallies quickly from here, you should be able to get close to this amount.

Your commission on this trade will only be $2.50 per spread (the rate charged by thinkorswim for Terry’s Tips’ subscribers).  Each contract would then yield $165.50 and your broker would charge a $500 maintenance fee, making your investment $334.50 ($500 – $165.50).  If ESNT closes at any price above $45 on September 20, both options would expire worthless, and your return on the spread would be 49% (389% annualized).

IBD Underlying Updates August 1, 2019 via Terry's Tips

IBD Underlying Updates August 1, 2019

Changes to Investor’s Business Daily (IBD) Top 50 This Week:

We have found that the Investor’s Business Daily Top 50 List has been a reliable source of stocks that are likely to move higher in the short run.  Recent additions to the list might be particularly good choices for this strategy, and deletions might be good indicators for exiting a position that you might already have on that stock.

As with all investments, you should only make option trades with money that you can truly afford to lose.

Happy trading,

Terry

PayPal (PYPL) Dips Following Earnings, What’s Next?

Monday, July 29th, 2019

This week we are looking at another of the Investor’s Business Daily (IBD) Top 50 List companies.  We use this list in one of our options portfolios to spot outperforming stocks and place option spreads that take advantage of the momentum.

Terry

PayPal (PYPL) Dips Following Earnings, What’s Next?

PayPal slipped lower after reporting earnings in the past week. Take a look at what these analysts are saying about the stock post-earnings – PayPal Q2 Earnings Beat Estimates, Revenues Up Y/Y and PayPal’s Earnings May Have Disappointed but Its Chart is “BTF”.

Paypal dipped to the 50-day moving average on Thursday and held above the moving average on Friday. The stock trades at a confluence of support as there is also a horizontal level in play. The level comes in at $113.70 and acted as both resistance and support in the past. In the event the stock falls to hold here, there is further support from the 100-day moving average close to around $112.

PYPL Chart July 2019 vertical options spread after earnings announcement

PYPL Chart July 2019

If you agree there’s further upside ahead for PYPL, consider this trade which is a bet that the stock will continue to advance over the next five weeks, or at least not decline very much.

Buy To Open PYPL 30AUG19 112 Puts (PYPL190830P112)
Sell To Open PYPL 30AUG19 115 Puts (PYPL190830P115) for a credit of $1.45 (selling a vertical)

This price was $0.02 less than the mid-point of the option spread when PYPL was trading near $115.  Unless the stock rallies quickly from here, you should be able to get close to this amount.

Your commission on this trade will only be $2.50 per spread (the rate charged by thinkorswim for Terry’s Tips’ subscribers).  Each contract would then yield $142.50 and your broker would charge a $300 maintenance fee, making your investment $157.50 ($300 – $142.50).  If PYPL closes at any price above $115 on August 30, both options would expire worthless, and your return on the spread would be 90% (1027% annualized).

Changes to Investor’s Business Daily (IBD) Top 50 This Week:

IBD Underlying Updates July 25, 2019 weekly trade ideas

IBD Underlying Updates July 25, 2019

We have found that the Investor’s Business Daily Top 50 List has been a reliable source of stocks that are likely to move higher in the short run.  Recent additions to the list might be particularly good choices for this strategy, and deletions might be good indicators for exiting a position that you might already have on that stock.

As with all investments, you should only make option trades with money that you can truly afford to lose.

Happy trading,

Terry

Can The Trade Desk (TTD) Continue the Upward Momentum Into Earnings?

Monday, July 22nd, 2019

This week we are looking at another of the Investor’s Business Daily (IBD) Top 50 List companies.  We use this list in one of our options portfolios to spot outperforming stocks and place option spreads that take advantage of the momentum.

Terry

Can The Trade Desk (TTD) Continue the Upward Momentum Into Earnings?

TTD has had a spectacular gain in the first half of the year, check out this article which outlines four reasons why it could continue higher – Is The Trade Desk a Buy?. Also take a look at this article published by Zack’s – The Trade Desk Outpaces Stock Market Gains: What You Should Know.

From a technical perspective, TTD is testing a horizontal level that had acted as resistance in May. Just below it, there is some further support from the 50-day moving average. So far, the decline from the top in early June has not had a lot of momentum behind it. This combined with the hold above the mentioned moving average signals that the broader trend remains firmly to the upside.

TTD Chart July 2019 verticle stock options spread

TTD Chart July 2019

If you agree there’s further upside ahead for TTD, consider this trade which is a bet that the stock will continue to advance over the next three weeks, or at least not decline very much.

Buy To Open TTD 09AUG19 230 Puts (TTD190809P230)
Sell To Open TTD 09AUG19 235 Puts (TTD190809P235) for a credit of $2.48 (selling a vertical)

This price was $0.02 less than the mid-point of the option spread when TTD was trading near $235.  Unless the stock rallies quickly from here, you should be able to get close to this amount.

Your commission on this trade will only be $2.50 per spread (the rate charged by thinkorswim for Terry’s Tips’ subscribers).  Each contract would then yield $245.50 and your broker would charge a $500 maintenance fee, making your investment $254.50 ($500 – $245.50).  If TTD closes at any price above $235 on August 9, both options would expire worthless, and your return on the spread would be 96% (1947% annualized).

Changes to Investor’s Business Daily (IBD) Top 50 This Week:

IBD Underlying Updates July 18, 2019 Terry's Tips

IBD Underlying Updates July 18, 2019

We have found that the Investor’s Business Daily Top 50 List has been a reliable source of stocks that are likely to move higher in the short run.  Recent additions to the list might be particularly good choices for this strategy, and deletions might be good indicators for exiting a position that you might already have on that stock.

As with all investments, you should only make option trades with money that you can truly afford to lose.

Happy trading,

Terry

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Success Stories

I have been trading the equity markets with many different strategies for over 40 years. Terry Allen's strategies have been the most consistent money makers for me. I used them during the 2008 melt-down, to earn over 50% annualized return, while all my neighbors were crying about their losses.

~ John Collins